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Uncertainty Surrounds Regulatory Landscape in 2013

Posted: 01/23/13 at
9:49 AM

By Bill Allmond, Vice President of Government and Public Relations -

Perhaps the word that best describes the regulatory landscape in 2013 is uncertainty. Specialty manufacturers are poised for further growth, but are held back by unanswered questions about the economy, as well as undetermined costs of pending regulations.

This month I attended the Council of Manufacturing Associations Winter Leadership Conference hosted by the National Association of Manufacturers. Chad Moutray, NAM's chief economist, showed data revealing that anxiety about regulatory costs is holding back manufacturing sales, hiring and investments. There are concerns within our industry and others that the Obama administration is sitting on numerous significant regulations, from environmental to health to economic, that it will unleash this year. We know, for example, that OSHA will initiate major rulemaking by the end of the year to further address prevention of injuries and illnesses in the workplace. This proposal, the Injury and Illness Prevention Program, or I2P2, is a top priority for Dr. David Michaels, OSHA’s capable administrator. It’s controversial because its scope is extremely broad and creates much uncertainty because an employer won’t know if he is in compliance until OSHA conducts an on-site inspection.

Furthermore, the regulations about which we are aware are worrisome. For example, EPA’s Chemical Manufacturing Area Sources rule, effective in 2013 and enforced under the Clean Air Act, is expected to cost hundreds of thousands of dollars per facility in return for minimal environmental or health benefit. These expenses will be taken from budgets that would otherwise be directed towards creating the next new innovation. Until it is fully known whether these and other regulatory costs imposed this year are short-term or can be passed on to customers, it’s difficult for manufacturers to accurately budget for or forecast their spending.

Because Congress is unlikely to successfully legislate for at least two more years, the Obama administration is likely to use as much of its existing regulatory authority to push new or expanded powers. For example, EPA has been unsuccessful in its attempt to reform the Toxic Substances Control Act to push additional safety responsibility on manufacturers, so it has proposed several regulations to address its concerns as a result. At least one of these proposals would, if enacted, severely compromise the competitiveness of chemical manufacturers by requiring them to publicly disclose the most proprietary of information about their chemistry, the very ingredient that makes them competitive and dare I say innovative. Some of these proposals are bottled up inside OMB, but with the presidential election now over, they could be released at any time.

On top of uncertainty about regulatory costs, there are a number of agencies now leaderless. As a result, we are left to guess who will fill vacancies following recent departures and how the new official, when and if confirmed, will approach regulatory development and enforcement.

In conclusion, uncertainty is, unfortunately, in our regulatory forecast. In meetings I’ve had with the White House during past four months, senior advisors assure me that the president wants the OMB to approve rules with an eye on how they will impact manufacturers. They say he gets frustrated when he learns of specific cases when that doesn’t happen. The administration, they say, believes that agencies need to give companies certainty about the rules it issues by better explaining their benefits, not simply by promulgating them. Whether this actually happens is highly suspect. But if it does, SOCMA has identified several case studies for President Obama and his team to look into through a website we launched last year, ReiningInRegulations.com.